motion to intervene in support of ACA International

23 Pages·2015·0.17 MB·English

USCA Case #15-1211 Document #1566940 Filed: 08/10/2015 Page 1 of 15
IN THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT
ACA INTERNATIONAL,
Petitioner,
v.
FEDERAL COMMUNICATIONS Case No. 15-1211
COMMISSION and UNITED (and consolidated cases
STATES 15-1218, 15-1244)
OF AMERICA,
Respondents.
MOTION OF MRS BPO LLC, CAVALRY PORTFOLIO SERVICES, LLC,
DIVERSIFIED CONSULTANTS, INC., AND MERCANTILE
ADJUSTMENT BUREAU, LLC, FOR LEAVE TO INTERVENE OR, IN
THE ALTERNATIVE, FOR LEAVE TO PARTICIPATE AS AMICI
CURIAE
Pursuant to 28 U.S.C. § 2348, 47 U.S.C. § 402(e), Fed. R. App. 15(d), and
D.C. Cir. Rule 15(b), MRS BPO LLC (“MRS”), Cavalry Portfolio Services, LLC
(“CPS”), Diversified Consultants, Inc. (“DCI”), and Mercantile Adjustment
Bureau, LLC (“MAB”), (jointly referred to herein as “Intervenors”), jointly move
for leave to intervene in support of the petitioner, ACA International, in the above-
captioned petition for review and all consolidated cases arising from the Federal
Communications Commission’s final order in the proceedings captioned In re
Rules and Regulations Implementing the Telephone Consumer Protection Act of
1
(Page 1 of Total)
USCA Case #15-1211 Document #1566940 Filed: 08/10/2015 Page 2 of 15
1991, CG Docket No. 02-278 (FCC No. 15-72) (released Jul. 10, 2015). Pursuant
to D.C. Cir. Rule 15(b), Intervenors understand that their motion to intervene in
this case will also be deemed a motion to intervene in the cases of Sirius XM
Radio, Inc. v. FCC, D.C. Cir. Case No. 15-1218, Professional Association for
Customer Engagement, Inc. (PACE) v. FCC, Case No. 15-1244, and any other
later filed cases, or other proceedings assigned by lottery procedures under 28
U.S.C. § 2112(a).
In the alternative, pursuant to Fed. R. App. P. 29(a)-(b) and D.C. Cir. Rule
29(b) and (d), Intervenors move for leave to file a brief amici curiae in support of
petitioner, ACA International.
I. STATEMENT OF THE INTEREST OF THE MOVING PARTIES
Each of the Intervenors -- MRS, CPS, DCI, and MAB -- currently operate,
and have over the past two decades operated, as debt collection agencies. The
primary tool used in Intervenors’ collection operations is the telephone, enabling
direct communication with individual consumers obligated to repay debts. Each of
the Intervenors has made a substantial financial investment in call center
technologies that incorporate hardware and software to maximize productivity in
their collection operations, through the use of software designed to place calls at a
rate that will minimize calling agent idle time, which are integrated with their
recordkeeping systems to facilitate documentation of calling practices. Outbound
2
(Page 2 of Total)
USCA Case #15-1211 Document #1566940 Filed: 08/10/2015 Page 3 of 15
calling with such technology increases operator productivity by 200% to 300%.
Edward L. Melnick, et al., CREATING VALUE IN THE FINANCIAL SERVICES,
STRATEGIES, OPERATIONS AND TECHNOLOGIES, Ch. 18, p. 363 (Springer, 1999).
The cost of each such investment varies, but generally the investment in hardware
and software for call center operations exceeds $50-100,000 each. DUANE SHARP,
CALLCENTEROPERATIONS, p. 65 (Digital Press 2003).
The actions of the Federal Communications Commission (“FCC”) in these
proceedings significantly affect the ways in which calls can lawfully be made, and
make anyone making outbound telephone calls subject to a claim that the calls
violated the Telephone Consumer Protection Act (“TCPA”), and expose the caller
to spurious class action claims that seek to impose ruinous damages invariably
prompting extortionate settlements.1 See Campbell-Ewald Co. v. Gomez, 135 S.Ct.
2311 (2015) (granting certiorari to review 768 F.3d 871 (9th Cir. 2014)); petition
for writ of certiorari, Campbell-Ewald Co. v. Gomez, 2015 WL 241891 at *2 (“the
Act has become an extortionist weapon in the hands of class action attorneys
seeking to extract lucrative attorneys’ fees for class-wide settlements.”).
Each of the Intervenors has been subjected to suit under the TCPA for calls
made in an attempt to collect debts, premised on the FCC’s expansive
1 http://www.reuters.com/article/2013/09/30/bankofamerica-robocalls-settle-
idUSL1N0HQ0HU20130930
3
(Page 3 of Total)
USCA Case #15-1211 Document #1566940 Filed: 08/10/2015 Page 4 of 15
interpretation of what constitutes an “automatic telephone dialing system,” referred
to as an “ATDS.” See, e.g., Echevvaria v. Diversified Consultants, Inc., 2014 WL
929275 (S.D. N.Y. Feb. 28, 2014); Nigro v. Mercantile Adjustment Bureau, LLC,
769 F.3d 804 (2d Cir. 2014); Holt v. MRS BPO, LLC, 2013 WL 5737346 (N.D. Ill.
Oct. 21, 2013); Horton v. Calvalry Portfolio Servs., LLC, 301 F.R.D. 547, 548
(S.D. Cal. 2014).
Each of the Intervenors is or has been a member of ACA International.
Each of the Intervenors is or has engaged in the business of making
telephone calls to collect debt, and has a substantial interest in maximizing
productivity of employees involved in such telephone calls.
Intervenors’ interests are substantially affected by the FCC’s actions and the
Court’s review of those actions, and each Intervenor is a “party in interest in the
proceeding,” entitling it to intervene “as of right” in this matter. 28 U.S.C. § 2348;
see also 47 U.S.C. § 402(e) (“any interested person may intervene and participate
in the proceedings had upon said appeal”). Wold Commc’ns, Inc. v. F.C.C., 735
F.2d 1465, 1473, n. 20 (D.C. Cir. 1984) (construing 28 U.S.C. § 2348 and 47
U.S.C. § 402(e) to allow for intervention without the need for petitioning for
rehearing, and authorizing “any [interested] person” to intervene).
Since enactment of the TCPA in 1991, collection agencies have argued for a
categorical exemption for debt collection calls from the restrictions applicable
4
(Page 4 of Total)
USCA Case #15-1211 Document #1566940 Filed: 08/10/2015 Page 5 of 15
under the TCPA; the FCC has long adhered to the view that such an exemption
was unnecessary “because such calls are adequately covered by exemptions we are
adopting here for commercial calls which do not transmit an unsolicited
advertisement and for established business relationships.” In the Matter of Rules &
Regulations Implementing the Tel. Consumer Prot. Act of 1991, 7 F.C.C. Rcd.
8752, 8773, 8790-93 (1992) (47 C.F.R. 64.1200(a)(2)(iii) & (iv) (1992)).
These two exemptions “apply where a third party places a debt collection
call on behalf of the company holding the debt.” In the Matter of Rules and
Regulations Implementing the Telephone Consumer Protection Act of 1991, 7 FCC
Rcd. 8752, 8773, ¶ 39 (July 26, 1995). The FCC also clarified that “all debt
collection circumstances involve a prior or existing business relationship.” Id. at
8771-72, ¶ 36; see also In the Matter of Rules and Regulations Implementing the
Telephone Consumer Protection Act Of 1991, 23 FCC Rcd. 559, 565, ¶ 11 (Jan. 4,
2008).
In 2003, the FCC addressed the application of the TCPA’s ATDS definition
to “predictive dialers.” In Re Rules & Regulations Implementing the Tel. Consumer
Prot. Act of 1991, 18 F.C.C. Rcd. 14014 (2003). The 2003 Order concluded that a
predictive dialer amounts to an ATDS even when the equipment does not use a
random or sequential number generator, but instead makes calls from a list or
database of numbers, because predictive dialers have “the capacity to dial numbers
5
(Page 5 of Total)
USCA Case #15-1211 Document #1566940 Filed: 08/10/2015 Page 6 of 15
without human intervention.” In Re Rules & Regulations Implementing the Tel.
Consumer Prot. Act of 1991, 18 F.C.C. Rcd. 14014, 14092 (2003); see In the
Matter of Petition for Declaratory Ruling Regarding Non-Telemarketing Use of
Predictive Dialers Rules & Regulations Implementing the Tel. Consumer Prot. Act
of 1991, 27 F.C.C. Rcd. 13031, 13036 (2012) (“predictive dialers are autodialers
under the TCPA, irrespective of whether such equipment uses a statutorily required
random or sequential number generator.”).
In 2008, the FCC “clarified” that debt collection calls made to cellular
telephones were not subject to the exemptions adopted for calls to residential
telephone lines, and that ATDS or prerecorded message calls to cell numbers were
permissible only if they could be shown to have been made with prior express
consent. In the Matter of Rules & Regulations Implementing the Tel. Consumer
Prot. Act of 1991, 23 F.C.C. Rcd. 559, 564 (2008).
In ACA International Petition for Rulemaking, CG Docket No. 02-278 (filed
February 11, 2014), the ACA requested the FCC clarify its rules to: “(1) confirm
that not all predictive dialers are categorically automatic telephone dialing systems
(‘ATDS’ or ‘autodialers’); (2) confirm that ‘capacity’ under the TCPA means
present ability; (3) clarify that prior express consent attaches to the person
incurring a debt, and not the specific telephone number provided by the debtor at
6
(Page 6 of Total)
USCA Case #15-1211 Document #1566940 Filed: 08/10/2015 Page 7 of 15
the time a debt was incurred; and (4) establish a safe harbor for autodialed ‘wrong
number’ non-telemarketing calls to wireless numbers.”
The ACA’s petition for review here seeks to: “(1) hold unlawful and set
aside the Federal Communications Commission’s treatment of ‘capacity’ within
the definition of an ‘automatic telephone dialing system’ under the Telephone
Consumer Protection Act, and compel the Commission to treat ‘capacity’ in a way
that comports with a caller’s rights of due process and freedom of speech; (2) hold
unlawful and set aside the Commission’s treatment of predictive dialers, and
compel the Commission to treat them in a way that does not expand the statutory
definition of an ‘automatic telephone dialing system’ under the Telephone
Consumer Protection Act beyond the definition that Congress enacted; (3) hold
unlawful and set aside the Commission’s treatment of prior express consent,
including the Commission’s treatment of reassigned numbers, and compel the
Commission to either - (A) establish a viable safe harbor for autodialed ‘wrong
number’ non-telemarketing calls to reassigned wireless numbers, or (b) define
‘called party’ as a call’s intended recipient.” Intervenors’ interests are substantially
affected by a decision on each of these issues.
II. GROUNDS FOR INTERVENTION
None of the Intervenors participated directly in the proceedings below;
however, both 28 U.S.C. § 2348 and 47 U.S.C. § 402(e) allow persons whose
7
(Page 7 of Total)
USCA Case #15-1211 Document #1566940 Filed: 08/10/2015 Page 8 of 15
interests are affected to intervene in this action, as long as the Intervenors have
Article III standing. Rio Grande Pipeline Co. v. F.E.R.C., 178 F.3d 533, 539 (D.C.
Cir. 1999); Deutsche Bank Nat. Trust Co. v. F.D.I.C., 717 F.3d 189, 193-95 (D.C.
Cir. 2013); Noel Canning v. N.L.R.B., 705 F.3d 490, 514-15 (D.C. Cir. 2013),
aff’d. 134 S. Ct. 2550, 189 L. Ed. 2d 538 (2014).
To have standing, the Intervenors must show: “(1) injury-in-fact, (2)
causation, and (3) redressability.” Nat’l Ass’n of Home Builders v. EPA, 667 F.3d
6, 11 (D.C. Cir. 2011) (citation omitted). “‘Thus, to establish standing, a litigant
must demonstrate a personal injury fairly traceable to the [opposing party’s]
allegedly unlawful conduct [that is] likely to be redressed by the requested relief.’”
Id. (citation omitted); see also Sierra Club v. E.P.A., 755 F.3d 968, 973 (D.C. Cir.
2014) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-561 (1992)).
Each of the Intervenors is eligible to intervene in this proceeding because
each currently uses (or has used) equipment and software to make telephone calls
from a list of numbers derived from a database, rather than numbers that are
randomly or sequentially generated, stored, or dialed.
Because of the FCC’s action, every call made by Intervenors over the past
four years and every call Intervenors make in the future with their equipment may
now be subject to challenge in a TCPA action. By failing to define an ATDS in a
way that permits a categorical classification of calling equipment as not qualifying
8
(Page 8 of Total)
USCA Case #15-1211 Document #1566940 Filed: 08/10/2015 Page 9 of 15
as an ATDS when it does not have the current capacity to make automated calls
without human intervention, and instead concluding that “[h]ow the human
intervention element applies to a particular piece of equipment is specific to each
individual piece of equipment, based on how the equipment functions and depends
on human intervention, and is therefore a case-by-case determination,” the FCC
has effectively allowed any one claiming he or she received a call to attempt to
persuade a Court that the call was made with an ATDS. FCC Order, ¶ 17.
Moreover, because telephone numbers are not transfixed to consumers like
social security numbers are, one can change his or her phone number as often as
one likes. See Alyssa Abkowitz, “Wrong Number? Blame Companies’ Recycling,”
The Wall Street Journal (Dec. 1, 2011);2 Craig Stroup, John Vu, FCC, Industry
Analysis and Technology Division, Numbering Resource Utilization in the United
States, pp. 5, 20-24, Table 7 (Apr. 2013) (discussing churn rates).3 The transitory
nature of the debtor population, along with their even more transient telephone
numbers, has created substantial difficulties and unique problems for Intervenors in
implementing the requirements of the TCPA. Consent to make ATDS calls under
2 Available online at
http://online.wsj.com/news/articles/SB10001424052970204012004577070122687
462582
3 Available online at
http://transition.fcc.gov/Daily_Releases/Daily_Business/2013/db0405/DOC-
319997A1.pdf.
9
(Page 9 of Total)
USCA Case #15-1211 Document #1566940 Filed: 08/10/2015 Page 10 of 15
the TCPA has been interpreted by the FCC to exists when the consumer knowingly
releases his or her phone number as part of a credit application. In the Matter of
Rules & Regulations Implementing the Tel. Consumer Prot. Act of 1991, 7 F.C.C.
Rcd. 8752, 8773, 8790-93 (1992). Debt collection calls to the number given,
however, cannot continue to be made after the consumer is no longer using the
phone number called. Soppet v. Enhanced Recovery Co., LLC, 679 F.3d 637, 639-
40 (7th Cir. 2012). What TCPA consequence falls on the caller, the former user of
the number, and the person actually receiving the call, were addressed by the FCC
in its recent Declaratory Ruling. In framing its response to these problems, the
FCC added a new layer of strict liability for calls reaching someone other than the
intended recipient of any given call.
Each of the Intervenors is adversely impacted by the FCC’s declaratory
ruling, and exposed to a very substantial and concrete risk of harm by the FCC’s
action, because Intervenors’ businesses and activities depend upon the use of
equipment used to make telephone calls that is swept under the FCC’s
extraordinarily expansive interpretation of the statutory term “automatic telephone
dialing system” under 47 U.S.C. § 227(a)(1), and the FCC’s narrow interpretation
of “prior express consent of the called party” under section 227(b)(1)(A).
If the Court were to affirm the FCC’s ruling, each of the Intervenors would:
(a) become subject to an ever increasing number of claims of TCPA liability for
10
(Page 10 of Total)